Melissa Lathon said she saw Medicare fraud climb in her 16 years as a social services director at six nursing homes. DREW A. KELLEY, CONTRIBUTING PHOTOGRAPHER

Family members as advocates

Family members can be advocates for seniors receiving therapy in nursing homes, said Dr. Lisa Gibbs, division chief for geriatric medicine and gerontology at UC Irvine.

Gibbs advises families to stay informed about a patient's therapy plan and ask questions. If a patient has stopped making progress, she said, "Then it's reasonable to start asking about the duration and reason for therapy."

Patients and families can turn to several government and advocacy groups:

Nursing homes in California – and notably in Orange County – are outpacing the nation in embracing the most expensive form of therapy for their patients on Medicare, triggering an outcry from some therapists who say the treatment frequently is unnecessary.

Fully 72 percent of Medicarerehabilitation patients in Orange County nursing homes in 2014 receivedtreatment at the highest rate allowed. That compares with 66 percent statewide and 58 percent nationwide, the California Health Care Foundation Center for Health Reporting found in an analysis of Medicare data for the Orange County Register.

The cost to taxpayers is upward of $500 per patient per day, contributing significantly to the nearly $30 billion per year that Medicare pays nursing homes for all patient care.

The practice, known as ultra-high care, can require frail patients to receive at least 12 hours of physical, occupational or speech therapy every week.

Some therapists in nursing homes say they’re being told by nursing home supervisors to give inappropriate treatment to patients, according to the three major therapist professional groups.

“We get calls from therapists who are being pressured to do practices that are unnecessary or illegal,” said Roshunda Drummond-Dye, director of regulatoryaffairs at the American Physical Therapy Association.

Melissa Lathon said she saw Medicare fraud skyrocket in her 16 years as a social services director at six nursing homes, including three in Orange County.

“They would pretty much twist the therapists’ arms and say, we need another week at the ultra-high level,” she said. And when she handled patient discharges, she said, “if they still had Medicare benefits available, they would not let me discharge them.”

Lathon said she left the field after a supervisor ordered her to fill out a document saying a patient needed assistance in walking when he had clearly shown he was walking independently.

Other area nursing home workers, including therapists, declined to talk publicly, saying they feared being “blackballed” in the industry.

Lathon criticizes Medicare for lax enforcement. She said she twice called a special Medicare fraud line, left messages with details of fraud and never heard back.

Government watchdog agencies, such as the inspector general at the U.S. Department of Health and Human Services, have long warned Medicare of potential abuses and have urged reforms.

Federal prosecutors allege in pending lawsuitsagainst two nursing home chains that therapists were ordered to treat dying patients. And the nation’s largest chain agreed Jan. 12 to pay $125 million to settle federal charges that it submitted false therapy claims.

POSSIBLE REFORMS

The U.S. Centers for Medicare and Medicaid Services says that payment reforms, in which nursing homes will be paid a set price per patient rather than for individual services, may provide a solution.

“Our value-based purchasing programs, payment reforms and quality reporting are working toward rewarding value, not volume,” CMS said in a statement issued to the CHCF Center for Health Reporting and the Register.

In an interview, officials at the leading group representing nursing homes agreed that such reforms have merit.

“The current payment system is not ideal, and we recognize that,” said Dan Ciolek, associate vice president of therapy advocacy at the American Health Care Association.

Many factors have prompted the boost in ultra-high therapy, Ciolek said, including hospitals discharging patients more swiftly, meaning patients require more therapy at nursing homes.In addition, patients and their families are more interested in facility-based therapy, he said.

Ciolek noted that a Cornell University-led study published Jan. 1 in the journal Physical Therapy found that nursing home patients with hip fractures who received an extra hour of therapy per week were 3 percent more likely to return to their homes.

The study also found that therapy above 720 minutes a week – the threshold for ultra-high therapy – was less effective than lower-intensity therapy in returning patients home.

MEDICARE PROFITS

Nursing homes care largely for long-term residents who are elderly, frail and often suffering from dementia. Most stay for months or years and finance their care with Medicaid, the federal-state health plan for the poor.

About 15 percent of residents are in nursing homes for therapy after strokes and procedures such as hip and knee replacement surgery. Most stay only a few weeks or months, with Medicare paying their bills for at least 20 days and as many as 100 days.

When therapy is included, Medicare pays nursing homes roughly three times more than Medicaid pays.

Ultra-high care is one of five Medicare therapy categories. The four others range from low to very high.

At 16 of Orange County’s 60-plus nursing homes, more than 80 percent of Medicare patients received ultra-high therapy in 2014, according to the center’s analysis. Among them:

• St. Edna Sub-acute and Rehabilitation Center in Santa Ana provided the therapy to 95 percent of its Medicare patients. Andrew Torok, general counsel for the center’s owner, Covenant Care, said its therapy can mean acute-care patients go home sooner than expected.

• Coventry Court Health Center in Anaheim provided ultra-high therapy to 93.5 percent of its patients. Its president, Shaun Dahl, said in a statement that it, too, receives many acute-care patients.

• Anaheim Terrace Care Center provided ultra-high therapy to 90.7 percent of its patients. Its owner, Genesis Healthcare, a large national firm, did not respond to questions.

• Ensign Group, based in Mission Viejo, told its shareholders that in 2014, Medicare paid it $563.94 per patient day, while Medicaid paid it $183.36 per patient day. Ensign owns 136 homes nationwide, including three in Orange County.

Boosted by therapy billings, Medicare has delivered at least a 10 percent profit margin to the nursing home industry every year for 13 years, according to figures from the congressionally chartered Medicare Payment Advisory Commission, known as MedPAC.

Because Medicaid patients frequently drain profits, Medicare patients on ultra-high therapy are valuable to the industry.

The profit – not the revenue – for a single day of ultra-high therapy for one patient is $66 compared with $45 for the next most intensive form, “very high,” according to estimates in a September 2015 report by the Health and Human Services inspector general.

The difference between ultra-high and very high therapy: 720 minutes a week (12 hours) vs. 500 minutes a week (8 hours and 20 minutes).

In a pending lawsuit against one of the nation’s largest nursing home chains, HCR ManorCare, attorneys for the federal government used an internal email to illustrate the pursuit of minutes and money.

“Can’t OT (occupational therapy) do an individual treatment today to get the RU (ultra high)?” an administrator wrote to a rehab director in Iowa, using all capital letters for emphasis. “You will miss it by 27 minutes and that is not cool.”

Medicare changed its rules in 2006 and again in 2010 to encourage lower-cost treatments. Instead, the trend toward more intensive, more expensive therapies has accelerated.

THERAPISTS REACT

Many therapists work directly for nursing homes or for companies controlled by nursing homes. They say nursing homes, not individual therapists, typically bill Medicare for their services.

Speech therapists often work with stroke and mild dementia patients. Physical therapists strengthen patients’ muscles and improve balance. Occupational therapists prepare them for daily tasks and sharpen their cognitive skills.

Two or more therapy types in combination adding up to 12 hours per week constitutes ultra-high therapy.

Rachel Wynn, a licensed speech therapist, said she had no autonomy to make decisions about her own patients at the four nursing homes where she worked.

Wynn quit after discovering that a supervisor was altering the hours spent on therapy on time reports she had filed electronically, boosting the minutes allegedly spent on therapy.

She alerted her national professional group, the American Speech-Language-Hearing Association. Together, the association and two other national therapy groupsproduced a statement for their members that explains federal billing regulations and lists the federal fraud hotline for the HHS inspector general.

Therapists are ethically bound to “deliver services that they believe are medically necessary and in the patient’s/client’s best interest,” the statement cautions.

Growing numbers of speech therapists have reported being pushed to step up therapy, according to surveys taken every other year by the American Speech-Language-Hearing Association.

The share of its members saying supervisors had pressured them to provide inappropriately frequent or intense service grew from 27 percent to 41 percent between 2009 and2015.

Kimberly A. Valentine, an Irvine-based attorney, said she often uncovers discrepancies in nursing home therapy records when researching wrongful death lawsuits. If medical records state the patient can’t get out of bed, she said, “I clearly know the patient isn’t walking 100 feet down the hall.”

These findings rarely become public because such lawsuits typically end in settlements that bar Valentine and her clients from discussing them, she said.

She added, “I feel badly for physical therapists who go into this for the right reason. If you end up in this industry, you’re going to be doing this. ... It’s a very vicious cycle.”

LAWSUITS

A handful of nursing home therapists have turned whistleblower, filing lawsuits under the federal False Claims Act.

In November 2013, Mission Viejo-based Ensign Group agreed to pay $48 million to settle a case involving allegedly false rehab claims at Sea Cliff Healthcare Center in Huntington Beach and five nursing homes in other Southern California cities.

Pending cases against two of the nation’s largest nursing home chains, HCR ManorCare and Life Care Centers of America, allege managers pressured therapists to step up treatments. The chains also are accused of administering expensive therapy to dying patients.

HCR and Life Care are fighting the lawsuits. Life Care has nursing homes in Garden Grove, La Habra and Lake Forest.

Deborah Schoch and Ron Campbell prepared this article as writers for the California Health Care Foundation Center for Health Reporting at USC’s Annenberg School for Communication and Journalism. Schoch can be reached at

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